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Deal Lined Up for BPA Payments by John Dodge The Olympian, November 29, 2007

How much would 22 million compact fluorescent bulbs cost?

A tentative deal has been reached that would restore Bonneville Power Administration payments to private utilities, including Puget Sound Energy, for a share of the region's low-cost hydropower.

Those energy benefits have shown up as a credit on the electric bills of residential customers since 1980, when the Northwest Power Act was approved by Congress.

The energy credits were valued at about $10 a month for a typical residential customer of Puget Sound Energy. They were eliminated in June after the 9th Circuit Court of Appeals ruled BPA violated the 1980 Northwest Power Act when it entered into 2002-05 contracts with the investor-owned utilities to pass on those benefits.

13 percent increase

The loss of those credits, which totaled about $300 million for all the private utilities in the region, translated into a 13 percent rate increase this summer for electric customers of Puget Sound Energy, including in Thurston County.

If the controversial deal is approved, it will total about $200 million a year through 2027, utility officials say.

But it's too early to tell what the new settlement would save Puget Sound Energy customers, PSE spokeswoman Martha Monfried said.

"We're pleased we've reached a tentative deal, but it may be a couple of months before we know how it all shakes out," she said.

Some public utility officials have called the deal flawed and say it's crafted at the expense of their ratepayers, giving private utilities too large a share of the cheap hydropower that public utilities and their customers have first rights to under the 1937 Bonneville Project Act. That act created Bonneville as a federal power-marketing agency.

"This proposal should send shivers up and down the spine of preference utilities," Grays Harbor Public Utility District general manager Richard Lovely said. "This proposal is a wolf in sheep's clothing."

Lovely said the payments force public utilities to subsidize private utilities at excessive levels for the next 20 years, violating the rate test in the Northwest Power Act that ensures public utilities' wholesale power costs paid to Bonneville will not increase as a result of Bonneville payments to the private utilities.

To pass the rate test, the benefits should be no more than $29 million this year, Lovely said.

"There is no legal way to implement this thing; the only way would be to amend the Northwest Power Act," Grays Harbor PUD Commissioner Tom Casey said.

The tug-of-war over cheap power from the region's hydroelectric dams has driven a wedge between public and private power interests for years.

The latest agreement was negotiated among BPA, private utilities and public utility representatives, but the public utilities are far from united in support of the deal.

"We're skeptical that this particular agreement can result in a legally sustainable, long-term resolution of this issue," said Joel Myer, spokesman for Shelton-based Mason County PUD No. 3.

Bonneville officials have said the proposal needs further review to see whether it passes legal muster.